Qualitative Changes in Global Economy due to Globalization
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This report explores the qualitative changes in the global economy due to globalization, including political, technological, economic, financial, and trade interdependence factors.
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Globalization is one of the most crucial element and a confused term as per the author Peter Dickens. According to the author the term globalization has been bifurcatedintotwomajordefinitionssuchasempiricalandtheideological perspective. Dickens (2015) accords the fact in his work that the qualitative changes that have occurred in the later three decades of the twentieth century are quite significant and different from the earlier qualitative changes in the global economy. The newer qualitative changes were largely dependent on two main factors namely theincreasinggeographicalcoverageandtheinterrelationshipbetweenthe economicactivities,andhencethescaleoftheimpactofthesaidqualitative changes. Over the period of the last 60 years the various works of the literature were carried out in order to find out the major transformation, observed in the definition of the globalization. The key drivers that have been considered as the major shift changers are growing interdependency, structural imbalances, amalgamation of the financial aspects and the other aggregate trends in the global economy (Scholte, 2008).Thisreportispreparedmainlytogetaninsightofallthequalitative characteristics to vouch the major shift in the economy at the global level. To get a clear understanding of the changes in the term globalization, it is necessary to be aware with the variance between the terms presented by the Peter Dickens andothertermsasprojected.While,theinternationalizationislimitedtothe quantitative measures of trade and changes therein, the westernization denotes the mere adaptation to the western culture. The globalization is comprised of both and therefore is different from the individual definitions of the above stated terms. The political landscapes are one of the key drivers of change in terms of quality that have been resulting in the shifts of the globalization. The end of the Cold War has marked the wide growing interest among the liberalist nations in the promotion of the free trade principle, where market mechanisms should hold a dominant position, and the government interference in the economic activities must be minimum (Hirst, Thompson and Bromley, 2009). The political factors facilitate the wiping of the barriers such as physical, technical and the fiscal barriers, the initiation of the public acceptances and the deregulation of the international trade all are some of the factors that are supportive in the qualitative changes. It is important to note that these nations have been significantly using the economic and military strengths to pursue their objectives in the varied political, cultural and social spheres. It is
significant to note that the globalization has managed to leave a great impact on the domestic politics, thereby under the pressure of the outside economic events, the political coalitions modify their policies and such policies vary greatly from country to country. The next preliminary major qualitative change is seen in the field of the technology and it is considered as one of the most evolutionary perspective. One of the major qualitative change that has occurred over the last few decades is the rise in the technologicalinnovationsandthedependencyoftheorganisationsandthe economies on the same. There has been a significant increase in the digital labour across the various industries and sectors worldwide. The widespread use of the internet has connected people from various corners of the world. The maximum information concerning an organisation is saved in digitised form which is capable of beingstores,processed,transformedandexchangedinthebinaryform.The technological shift majorly came into existence when it is being used to solve the problems in the highly differentiated and volatile environment. The different types of thechangesarealsoaugmentedwhichareincrementalinnovations,radical innovations, changes of the technology system as well as the techno-economic paradigm. The best example is of evolution of the aircraft from steam locomotives, to propeller aircraft to jet passenger craft. The unprecedentedly way increased the rapid individual travel and also allowed the people to commute in the short span of time. The jet transport significantly created an upward graph in the field of the geographical disbursement.
(Source: Dickens, 2015) Few of the major technological changes are in the field of the information and the communication, energy, material technology, bio, space technology as it can be reflected from the above image. The evolution and the changes at the technological upfront have not only resulted in the squeezing of the cost and the time of the doing of the operations, it has also facilitated by the hypothetical teams that created a shift in the form of the commuting as well as the communication. Further, additionally there has also been a sudden increase in the information carrying capacity of the submarine oceanic cable systems which are being made up of the optical fibre cables. Due to the shift in the technology, a round about 90% usage of the optical fibre can be seen in from the image below.
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(Source: Dickens, 2015) The next driver for the changes of the qualitative nature is the acceleration in the global economic growth over the world. The significant increase in the activities of exporting is definitely marked by the interconnected trade and geographical balances over the period of the 60 years. The major reason is the outpacing of the growth of the usual trade in comparison to the FDI (Held et. al, 1999). It grew very rapidly in the first half of the 20thcentury, but the comparison of its growth after the Second World War is also incomparable. Due to this mechanism the most of the countries are investing in the overseas business in order to earn profit and for potential investments. Due to this mechanism the knowledge area has widened, the natural resources have been put to use in the précised manner, whereas there is a high class balance of the labour availability and its productivity. Further the economic growthiscomplementedbythedevelopmentofthespecialeconomiczones, business clusters and encouragement of the foreign direct investment in the host economies. Present era is marked by the creation of the transnational organisations by various means such as the consolidation, foreign branches, franchises or other such means. These days almost all the major transnational organisations have developed their business activities anywhere in the world. Inaddition,thenextchiefqualitativechangeisinthefinancialsectorofthe economies marked with the financial integration processes and complex modern financial products. The financial sector has widened considerably beyond the mere
provision of loans and has included a number if activities in its ambit namely the business consultancy services, insurance services, investment bankingand the corporate banking. The expansion in terms of the geographic coverage combined with the complexity of the products and the interconnectedness of the economies makes the financial crisis in one country affect the other parts of the world as well. The author Peter Dickens accords the same fact in his work by stating the examples of the various financial crisis, the major being the global financial crisis of the year 2008. While the crisis has marked with the fall of the real estate and banking sector in the United States, it had soon spread to the various parts of the world, affecting almosteverydevelopedandsmalleconomy.Further,thefinancialintegration beyond the borders comes with the responsibility for the authorities to oversee the operations of the banks and other players of the financial sector and develop and implement strong internal policies to cope up with such crisis. The further qualitative change is in the form of the trade interdependence among the countries. As accorded by Peter Dickens in his work, the export activities have risen in a whooping manner marked by the international trade agreements, large capital investments and efficient use of the resources such as natural resources, capital, manpower, technology and others. This has not only resulted in the economies of scale, but the corporations also benefit from the geographical expansion in terms of the consumers and human resources as well. Further, the global trade scale has also led to the creation of the independent international authorities to oversee the trading activities and the resolution of the international conflicts among the countries. (Ohmae,1990)The World Trade Organisation (WTO) and the European Union (EU) are two key examples of the same. Some of the major industries that have benefitted widely from the free trade flow are the textile, metal mining, information technology, agriculture, oil and gas, among others. Apart from the organisations mentioned above, a number of regional trade agreements have also been entered to encourage the free flow of trade among the member countries. One of the most popular trade agreementisNAFTA(NorthAmericanFreetradeAgreement)followedbythe ASEAN version of the same namely the AFTA (ASEAN Free Trade Agreement). The next qualitative change in global economic landscape is that of the development and the adoption of the various environmental and ethical practices in the conduct of the business and the running of the economies. The international organisations like
the United Nations are increasingly working towards the protection of the natural resourcesandthusencouragingbusinessestobemoreconsiderateofthe sustainable business practices in their overall conduct. Apart from it, the agreements liketheUnitedNationsFrameworkConventiononClimateChange,Vienna Convention for the Protection of the Ozone Layer, Kyoto Protocol, Montreal Protocol, Basel Convention and others have been enacted to overlook the activities of the membercountriesandtoprovidetheguidanceforthenaturalresources conservation. Thus, with the increasing business activities and globalization, there has become a greater need to be aware of the environmental conservation. Further,thequalitativechangesarealsoinclusiveofthemodificationsinthe consumerdemandsandpreferencesbasedontheculturalanddemographic developments,healthandhygieneawarenessandtheinternationalmarketing strategies driven by the technological innovations. As a response to the above, the increasing number of the organisations are establishing the globally responsive structures, marked by the decentralized multinational strategy also known as the glocalization and the modifications in the supply and production chains. Thus, the relationship between the sellers and the buyers have significantly evolved over the past half century of years. Thus, the discussions in the previous parts of the work enable us to conclude that there has been a number of major qualitative and the quantitative changes by the virtue of the globalization in the past few years. The above work was limited to the qualitative changes as elaborated by Peter Dickens in his work and the resultant global shifts because of the said changes. Some of the chief changes that are being highlighted in the work are the change in the economic and political landscapes, global financial industry remodelling, technological and environmental reforms and thechangeintheconsumerpreferences.Thus,theworkconductedthe comprehensive study of the Dicken’s book and concludes that there has been achieved an overall ease of trade and interconnectedness of the economies and the people by virtue of the globalization.
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References Dicken,P.(2015)GlobalShift:MappingtheChangingContoursoftheWorld Economy. 7thed. New York: Guilford Press. Held, D., McGrew, A., Goldblatt, D. and Perraton, J. (1999)Global transformations: Politics, economics and culture. Stanford: Stanford University Press. Hirst, P., Thompson,G., and Bromley, S. (2009)Globalization in Question. (3rd Edition)UK:PolityPress. Ohmae, K. (1990)The Borderless World. Power and Strategy in the Interlinked Economy, London: Fontana Press. Scholte, J. A. (2008)Defining Globalization.The World Economy.31(11), pp. 1471-1502.